U.S. equity markets opened for the first time this week following superstorm Sandy.
The S&P 500 index peaked at 1,418.25 Wednesday, and is currently trading just below that level. The resistance level to look at is 1,417.5, and although we have traded above here, the S&P will have to close above that level to signal bullish momentum.
(Read More: How the Decision to Close Wall Street Came About.)
Chinese manufacturing and PMI data will be announced late Wednesday, and U.S. jobs data will come out later this week. With this news ahead, and with this being the last day of the month, I do not expect any big bets to slingshot this market higher.
Volume may be light right now, but I will be looking for support at 1,412, Tuesday's closing range, to buy the first test. On a close above 1,417, the next resistance level will be the 50-day moving average at 1,427.75. There will be light data out of the U.S. today, including Chicago PMI.
So how should you trade the S&P now?
The bottom line is this: Be an opportunistic trader, and take advantage of market overcompensation in either direction. I will sell the first test of the 50-day moving average at 1,427, with a 1,437 stop and a target of 1,417. Each point in the E-Mini SP is $50, so this trade is risking $500 to potentially make $1,000.
A final note: This is a day trade, meaning that all orders expire at the close unless filled.
Read on for 10 Things You Need to Know to Trade Futures
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